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Real Estate Investment Strategies for Beginners: Traditional and Alternative Options

Real Estate Investment Strategies for Beginners Traditional and Alternative Options - Real Estate Investment Strategies for Beginners: Traditional and Alternative Options

Although there are many real estate investment strategies, some are not well known to beginners or people who do not know the market in-depth and how to operate. Nevertheless, investing in real estate provides attractive profits, especially in a period of financial instability, when the real estate market is considered a safe-haven asset.

Traditional Real Estate Investment Strategies

There are, basically, two. The first is buy to rent, short or long-term letting. This alternative continues to provide benefits. In fact, in Spain, the gross rental return in 2021 stood at 3.7%, according to the Bank of Spain. Some other analyzes indicate a 6%, though.

The other strategy is to buy now and keep the property until prices rise to sale and get a profit. But keep in mind that it is a long-term strategy. In addition, it is essential to choose the property location carefully to ensure the revaluation of the property.

Alternative Real Estate Strategies

There are other strategies, sometimes riskier, less known for the small investor. However, it's not necessary to be an expert in the real estate market to apply them and also offer good returns:

Buy and restore: it is buying properties at affordable prices but needing reforms. The goal is to improve its appearance to sell and obtain a profit higher than the investment made in the rehabilitation. There are two possibilities: an in-depth reform to sell to individuals or a simple home improvement to sell to investors who will later take care of the in-depth reform.

Wholesale: in this case, it is about acting as intermediaries, as real estate agents. The great advantage is that it won't be necessary to contribute capital or make investments, although good negotiating skills are needed. In short, it is about searching for properties for sale, seizing the rights and identifying a buyer. The benefit will be the commission for the sale.

Short selling are sales made instead of foreclosure. This means the owner sells below what he owes the bank to avoid defaulting. This formula requires good negotiation skills since all those involved (including the bank) must agree.

Real estate investment Trusts: as well known as REITs, are investment companies, usually listed on the Stock Exchange, that buy and manage real estate, generally to rent them. At least 90% of its income must be distributed among shareholders through dividends, making it a very accessible form of real estate investment.

Real estate crowdfunding: through online platforms, a small investor can contribute to support a real estate project. The advantage is that these contributions can be small to diversify assets. The return on investment is obtained, yes, in the medium term.

All of the previously mentioned investment strategies allow gain benefits without having financial or real estate market expertise. If you are looking for the best opportunities, offers you a broad list of homes for sale, so you can choose where and how to invest.

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